Redefining ‘Big Oil’: add up the first half 2017 income of Shell, Exxon, BP, Chevron and Total—Aramco, the world’s largest oil company, is bigger than all of them combined

If Saudi Aramco has its way, it will soon be the most valuable public company in the world. The oil giant is planning what will almost certainly be the largest IPO in history, dwarfing the $25 billion raised by Alibaba in 2014.

Crown Prince Mohammed bin Salman has suggested that Aramco as a whole should be valued at a staggering $2 trillion, well beyond any other public company. Plans for the IPO suggest 5% of the company would be sold, which would raise $100 billion—if Aramco receives the valuation it believes it deserves.

However, one missing element of the valuation metrics has been absent from public view: Aramco’s financials.

While the company may have discussed financial performance with large investors in private sessions, hard numbers have been missing from the public realm. Until today.

Financials for the Saudi giant come to light

Bloomberg News has flipped on the light over Aramco’s books by revealing key metrics regarding Aramco’s performance in the first half of 2017. These data points make it possible to compare the company to public supermajors, giving hints as to the company’s possible valuation.

$33.8 billion in net income

Bloomberg reports Aramco had a net income of $33.8 billion in the first half of 2017. This easily surpasses the titans like Apple, which earned $28.9 billion, and Samsung, which earned $14.0 billion.

Compared to the oil industry supermajors, the Aramco number is even more impressive.

The $33.8 billion earned by Aramco in the first half of 2017 surpasses the net income of ExxonMobil, Shell, Chevron, BP and Total combined. The five supermajors earned a combined $23 billion in that same time, 32% below Aramco’s income.

Source: EnerCom Analytics

While the net income over a given period is far from the only consideration when valuing a company, this data point can be used to estimate a valuation for Aramco.

The supermajors currently have a combined market cap of about $1.15 trillion. Based solely on Aramco’s net income in the first half of 2017, the company would be worth about 45% more than the supermajors, or roughly $1.68 trillion.

Aramco, like many other major oil companies, pays a significant dividend. In the first half of 2017, Aramco paid $13 billion in cash distributions. While this is above the $6.4 billion distributed by Exxon and $7.8 billion by Shell, it is at a lower rate. Shell and Exxon combined produced less than 60% of Aramco’s volumes in 2016, which is the most recent production value for the company, but paid out a higher combined dividend. If Aramco were to pay out a comparable dividend on a per BOE basis, it would have to pay at nearly double the current rate—$24.8 billion.

Exxon currently has a dividend yield of about 4%. If Aramco is valued at a similar yield and receives a $2 trillion valuation, it would need to pay about $80 billion each year in dividends, well beyond the rate seen in the first half of 2017.

Aramco’s production costs: $4 per barrel

The massive Ghawar Field, and other fields in Saudi Arabia, are generally regarded as some of the cheapest in the world, and the financial data available seems to confirm this.

Bloomberg reports that Aramco spent about $7.9 billion in production costs in the first half of 2017. This works out to an operating cost of roughly $4 per barrel, compared to around $20 per barrel for Exxon and Shell.

These low operating costs mean Aramco can benefit significantly from any rise in oil prices, and no doubt did in the second half of the year. Brent averaged about $53/bbl in the first half of 2017, and the European benchmark has since risen to $72/bbl.

$37.4 billion in free cash flow

These low production costs mean Aramco is able to generate significant cash, a definite positive in an investment environment currently focused on returns over growth.

Bloomberg calculates in the first half of 2017 Aramco received $30.7 billion in net cash from operations, and the company was owed a further $21.4 billion from the government. This adjusted cash flow from operations equates to $52.1 billion, well above the $20.8 billion earned by Shell and $16 billion earned by Exxon.

Aramco invested $14.7 billion in CapEx in the first half of 2017, giving the company free cash flow of $37.4 billion.

Taxes total $58.4 billion

One financial metric that is less positive for potential investors is the company’s tax burden. Aramco is one of the main sources of revenue for the Saudi government, and it shows.

The company paid $58.4 billion in taxes in the first half of 2017, split between royalties and income tax. Aramco is now subject to a sliding royalty that increases as oil price rises. According to Bloomberg, the royalty is set at 20% for oil prices up to $70/bbl, which rises to 40% between $70 and $100, and a 50% royalty in excess of $100/bbl.

Aramco’s net debt comparable to a small cap E&P

Perhaps the most impressive figure on Aramco’s books, however, is its net debt.

The company had $20.2 billion in debt at the end of the first half of 2017, but this value was almost entirely offset by about $19 billion in cash and cash equivalents.

Virtually every oil and gas company was forced to rack up debt during the downturn. The five supermajors have a combined $189 billion in net debt.

Exxon and Shell have the largest individual bills, with net debt of $39.2 billion and $65.4 billion respectively. Among large cap E&P companies only two firms have less than $1.3 billion in net debt, Cabot Oil & Gas (ticker: COG) and Cimarex Energy (ticker: XEC). Aramco’s net debt of $1.3 billion is actually comparable with that of many small cap E&Ps.

IPO currently planned for only the Saudi stock market, international listing venue still undecided

Aramco’s path to sell its shares has been a rocky one, and deciding where to list the company has taken longer than expected.

Recently, however, the Saudi oil minister announced Aramco will be listed on Tadawul, the country’s domestic stock market, which will allow the company more time to decide where else it should list. The precise timing has not yet been announced, and potential investors are still waiting to see official financial data. In the meantime, however, the financials uncovered by Bloomberg can begin to inform future investors on the financial health of the world’s largest oil company.